Monday, July 21, 2014

EUA Dec14: Cautious appreciation with halved auction volumes looming

The EUA Dec14 is moving in a slightly increasing trend channel. The four white candles from last week helped the MACD crossing the signal curve giving another sign for further appreciation. Friday’s candle however forms a bearish engulfing which might indicate a halt to the further appreciation or the start of a correction. 
The range between 5.40 and 6.24 euro was the comfort zone of the benchmark contract in the last two months. Auction volumes will be halved in August which might have a positive effect on prices, if the utilities are actively hedging. In the absence of the utilities the price might move sideways, as the ENVI won't start the negotiations about the Market Stability Reserve before the members return from their summer holidays. 
The RSI is still in the neutral territory (at 58).
The next resistance levels are 6.24 (last week's high)/6.27 euro (a local high from 24 March) and 6.54 euro (a Fibonacci level calculated from 2014 high and low).
From the downside 6.00 euro (a psychological and a Fibonacci level) and 5.90 euro (the low from last Thursday and also the 20DMA) can support the price. The 30DMA at 5.80 is the next level.

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